City, county to opt out of sales tax holiday

The city of Columbia and Boone County will both sit out this year’s statewide sales tax holiday Aug 5-6.

This marks the second year the city and the county have abstained from the tax holiday, which offers consumers a break from sales taxes on back-to-school items such as school supplies, clothing and shoes and up to $3,850 worth of computer equipment and software.

State sales tax will not be charged, even in areas that have opted out of the tax holiday. State sales tax totals 4.225 percent.

Both the city and the county rely heavily on sales taxes for revenue. The city expects to rake in about $35 million in sales tax in 2005, which amounts to more than 36 percent of its general revenue. The county expects to collect about $22.8 million in sales taxes this year, which would amount to nearly 60 percent of its total revenue.

A study conducted by the Department of Agricultural Economics at MU showed that the state of Missouri and local governments lose a combined $18.5 million in tax revenue on the holiday.

Both the city and the county have passed ordinances formally withdrawing from the holiday. Southern District Commissioner Karen Miller said she doesn’t think the tax helps the people it’s supposed to.

“When you talk about computers and stuff, the poor people that you are trying to give a break to don’t have the money to buy computers anyway,” Miller said.

Sixth Ward Councilman Brian Ash said the city ought to extend a sales tax break. Ash, who owns Bambino’s restaurant and the Palomino Banquet Room, said the holiday makes people more apt to spend money, and he fears the city could be losing retail sales to the cities that do participate in the holiday.

Some retailers in the past have approached the City Council and the Boone County Commission to lobby for participation. Sonja Derboven, a marketing manager for Columbia Mall, said the presence of city and county sales taxes on the holiday gives competing communities a temporary economic edge. Derboven, however, said the mall normally does well during the holiday.

“It is a big weekend just because it is back-to-school time as well,” she said.

Columbia is one of 171 cities that have opted out of the tax holiday this year. Boone County is among 65 counties choosing not to participate.